FIA

Published 13 July 2010 – In the latest update on Financial Services Providers licenses, Financial Services Board (FSB) Deputy Executive Officer for Market Conduct and Consumer Education, Mr. Gerry Anderson has stated that the FSB has finalised the processing of 19 986 (previously 19 905) applications for authorisation as financial services providers to date. In total, 1 857 of these applications have been declined (previously 1 845).
During this reporting period, twelve applications have been declined; the authorisation of a further 500 FSP’s has been suspended; the prior suspension of 40 FSP’s has been lifted; there has been 7 withdrawals of authorisation; and 4 withdrawals of authorisation have been re-instated.

With regard to the large number of licenses suspended, Mr. Anderson advises, “The recent large number of suspensions of FSP authorizations are mainly attributable to the non-payment of FAIS annual levies over a period, which could incorporate more than one financial year.

The last levy invoices (2009) were payable by 31 December 2009.   The FSB was only empowered from 1 November 2008 (through an amendment to the FAIS Act, which came into operation on that date) to suspend or withdraw licenses, specifically for non-payment of levies due to the Board.  In a minority of cases, suspensions can be ascribed to the non-submission of annual financial statements and / or annual compliance reports as is prescribed by the FAIS Act.  It should also be noted that suspensions occur when the contraventions are rectifiable and if rectified by the FSP concerned, the suspensions are lifted”.

“No specific FSP license category is involved, this is across the Board”, adds Mr Anderson.

Asked whether the large number of suspensions should be cause for concern, Mr. Justus van Pletzen, Chief Operating Officer of the Financial Intermediaries Association of Southern Africa (FIA) said, “Remember that the number of registered FSP’s is down from 14 700 to 12 800. This is due to many reasons, people leaving the industry, dormant companies, mergers, and outstanding compliance requirements”.

Mr. van Pletzen adds, “The impact of the Regulatory Exams will also have an affect going forward and intermediaries who wish to cancel their licenses should follow the procedure set out in the FAIS Act and should not simply stop paying levies”.

With regard to the status of such intermediary’s clients, Mr. Joe Kotzé, National Manager of Compliance at the FIA notes, “Suspension of licenses for a term will essentially happen because of the current failure of FSP’s to pay their annual levies or submit their compliance reports and financial statements. The Registrar must follow due process before a license can be suspended and may reinstate the license when set conditions have been met by the FSP.

The suspension of a license must not be confused with the withdrawal of a license. Withdrawal of a license usually has a more severe consequence in that the applicant must start afresh in applying for a license. In both cases of suspension and withdrawal the FSP and its functionaries may not render any financial services until the suspension has been lifted or a new license has been authorized.

Intermediaries who retire or leave the industry for other reasons will normally request the registrar to lapse the license of the FSP.

Where a license is suspended, withdrawn or lapsed, the FSP must follow the general code of conduct (section 20) and inform all clients of the FSP’s status. The FSP must also arrange contingency so that clients now know who to approach for rendering of advice or intermediary services. The FSP must also ensure that unfinished business that clients may have is concluded by intervention of another FSP, or according to the clients’ choices.

The above is covered by sections 9 and 11 of the FAIS Act”.

Source: Insurance Gateway®

Please download the attachment to view the FSB’s full report.